OPM Sends Reminder on Added Costs of Buyouts, Early Outs

OPM has reminded agencies that there is an additional cost to paying buyouts and offering early retirements–which while relatively minor compared to the major costs needs to be taken into account and that in some cases could change the calculus regarding whether to make offers, and how many.

In recent years, annual appropriations bills have required that agencies pay an additional fee into the federal retirement fund to recompense OPM for the added costs of processing retirements made under early retirement and buyout situations. In 2017, it said, that cost is $127.86 per employee.

That cost is in addition to the standard $25,000 cost of a buyout–DoD can offer up to $40,000 and the administration has proposed raising the maximum to that amount government-wide–and the internal cost to an agency of conducting buyout and early retirement offers. Those costs include communications to employees, training, estimating retirement benefits for those considering accepting, and the agency’s own costs of preparing retirement applications to be sent to OPM for processing.

An IG report issued earlier this year said, for example, that a round of buyouts and early outs at EPA in fiscal 2014 cost $11.3 million–plus another $4.9 million in the value of payments for unused annual leave–to entice 456 employees to leave.